Microsoft Expands Operations in India
Amit Bhargava/Bloomberg News
Steven A. Ballmer, right, claps as the chief minister of Andhra Pradesh, Y. S. Rajasekhar Reddy, opened the Microsoft center.
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By SARITHA RAI
Published: November 16, 2004
 ANGALORE, India, Nov. 15 - The Microsoft Corporation
announced on Monday that it was significantly expanding its software
development operations in India as it opened a new campus near
Hyderabad, its second-largest campus after its headquarters in Redmond,
Wash.
Microsoft's chief executive, Steven A. Ballmer, formally
opened the 28-acre campus in the suburbs of Hyderabad, which is 250
miles north of Bangalore, a rival technology center. The campus thus
far has only one building, with capacity for 1,600 workers. Besides Mr. Ballmer, the chief executive of the Intel Corporation,
Craig R. Barrett, is to arrive in India this week, highlighting the
country's growing role as a source of skilled technical labor as well
as a sizable market. Mr. Barrett is scheduled to visit Bangalore and
Delhi this week. The issue of outsourcing, the movement of work
to cheaper labor markets like India, was an issue in this year's
presidential elections in the United States. The Democratic contender,
Senator John F. Kerry, had promised to get tough on companies that were moving jobs overseas. Even with the re-election of President
Bush, corporations like Microsoft are still wary of being tarred as the
cause of job losses. Mr. Ballmer said that his company would expand in
India, but that this would not reduce job opportunities at its
operations in the United States. "The nature of our
business is such that there is enough growth potential which allows us
to hire both at our Redmond headquarters and here in India," Mr.
Ballmer said after the opening. Microsoft has nearly 450 programmers at
its development center in Hyderabad. "Since we are looking for very
high levels of skills, we are looking to hire in the hundreds," Mr.
Ballmer said. Last year, Microsoft said that it expected its
development center to have 500 employees by 2005, but Mr. Ballmer said
the company would exceed that target. Microsoft is not alone. Global corporations like General Electric and American Express
started by outsourcing low-end code-writing work to India, but taking
advantage of India's pool of technical workers and lower labor costs,
many multinational companies have recently stepped up outsourcing.
Microsoft's own software development center in Hyderabad opened in 1998
with only 12 employees. Increasingly, though, these corporations
are outsourcing high-end technology work to India. Microsoft, for
instance, outsources work, from call centers to advanced embedded
software development, to India. "Many corporations have super-,
hyperaggressive outsourcing plans to India to meet their growing needs
while keeping costs under check," said Chris Disher, the Chicago-based
vice president and head of Booz Allen Hamilton's outsourcing advisory
service. While Microsoft's hiring plans are not huge, Mr. Disher
said, its moves do send "an important signal about the competencies and
innovation skills that are available in India." Mr. Ballmer, who
visited three Indian cities on Monday, signed major agreements with two
of India's leading outsourcing companies, Infosys Technologies and Wipro
in Bangalore. The deals will enable Infosys and Wipro to use Microsoft
technologies to build software for their clients at more favorable
terms. With Infosys, Mr. Ballmer announced an $8 million joint venture.
"These deals signify Indian outsourcing companies' growing clout
in influencing technology decision in American boardrooms," said Sudip
Nandy, chief strategy officer of Wipro. Microsoft is one of
Wipro's top five customers, and Wipro provides it with a range of
services, from call centers to I.T. services to software development.
The work for Microsoft employed 200 Wipro employees in March 2001; now
it uses more than 5,000. "I'm excited about what's going on here in India," Mr. Ballmer told reporters in Bangalore after signing the two deals.
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